BANK  CREDITS 


BY  D.  B.  DEWEY. 


LIBRARY 

OF  THE 

Jniversity  of  California. 

GIFT  OK 

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cession  No.  ^0^^ /       .    Class  No. 


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[^FIVBKJITT] 
ADDRESS 

DELIVBRKD  BY 

D.    B.    DEWBY, 

BBPORB  THE 

BANKERS'  ASSOCIATION  OF  THE  STATE  OF 

ILLINOIS,  AT  SPRINGFIELD,  ILL., 

OCTOBER  15,   1896, 

AND 

REPEATED  BY  REQUEST  OF  THE  BANKERS' 

CLUB  OF  CHICAGO,  AT  A  MEETING 

HELD  OCTOBER  17,  1896. 


^4 


ae-sf/ 


BANK  CREDITS. 

How  to  successfully  make  credits  is  a  problem 
every  bank  officer  in  active  work  grows  old 
trying  to  satisfactorily  solve.  There  are  no 
infallible  methods  of  determining  who  shall  be 
entitled  to  credit,  but  there  are  general  prin- 
ciples which  must  govern  the  making  of  credits, 
and  the  relations  between  the  banker  and  cus- 
tomer, in  order  to  secure  solidity  and  perpetuity 
of   prosperity. 

He  who  is  wisest  in  the  application  of  these 
principles  to  individual  cases,  he  who  best  under- 
stands the  law  of  business,  and  most  clearly 
interprets  this  law,  will  be  safest  from  disaster. 
It  is  true  that  in  integrity,,  truth,  honor  and 
honesty  there  can  be  no  variations,  but  the 
attempt  in  actual  transactions  to  establish  an 
inflexible  rule  to  goyern  all  conditions  in  credit 
making,  is  to  create  an  obstacle  that  will  be 
sure  at  some  period  to  plunge  the  banker  into 
despair. 


The  ability  to  quickly  and  diplomatically 
adapt  ourselves  to  conditions  as  they  develop,  to 
read  men  as  an  open  book,  and  mold  them  by 
superior  will  and  tact,  is  within  the  power  of 
some  men,  and  when  possessed  is  a  priceless  gift. 
Tact  will  triumph  over  genius  and  is  the  key 
that  opens  the  door  to  success.  Tact  has  been 
said  to  be  *'  the  child  of  necessity. '' 

A  hesitating  man  never  shines  in  an  emer- 
gency ;  indecision  is  a  fatal  disease  in  all  busi- 
ness, especially  in  banking.  Life-s  pathway  is 
strewn  with  victims  caught  in  adversity's  storm 
because  they  paused  at  important  periods  to 
dally  with  temptation  and  to  question  a  policy 
experience  has  proven  to  be  the  only  safe  one. 
Brilliant  achievements  are  always  the  reward  of 
prompt  action  ;  moments  are  often  crucial  periods 
in  destiny.  This  rule  applies,  however,  only  to 
principles  ;  action  without  prudent  investigation 
is  equally  or  more*  dangerous.  The  safe  banker 
never  decides  until  all  doubts  are  removed, 
knowing  that  peril  lurks  in  every  banker's 
pathway. 

The  thoughtful  man  knows  that  prosperity 
and  adversity  are  and  always  have  been  opposing 
forces,    each    has   its  time   to   reign.      He    also 


knows  that  the  former  invests  us  with  the 
opportunity  to  provide  against  the  ravages  of  the 
latter.  When  a  banker  finds  a  customer  who 
does  not  recognize  this  law,  it  should  be  notice  to 
him  to  beware. 

Sunshine  will  be  succeeded  by  cloud.s,  clouds 
by  storm.  In  fair  weather  a  wise  man  provides 
against  the  foul^  to  save  himself  from  the  perils 
of  exposure. 

CREDIT-ITS  BASIS.  USES  AND  ABUSES. 

Credit  is  based  on  confidence — confidence  in 
the  integrity,  character  and  ability  of  the  bor- 
rower ;  confidence  in  the  stability  of  government, 
in  the  possibilities  of  developing  the  resources  of 
the  country  and  the  probability  of  success. 
Confidence  is  the  life  of  business.  Daniel 
Webster  says,  ^'  Credit  is  to  money  what  money 
is  to  goods.^'  Again  he  says,  '*  Credit  has  done 
more  a  thousand  times  to  enrich  nations  than 
all  the  mines  of  all  the  world.''  Demosthenes  says, 
**  There  are  two  kinds  of  property,  money  and 
credit ;   the  greatest  property  is  credit.'' 

It  is  true  that  credit  on  a  solid  ba-  nuch 

morr  iin])()rtant  factor  in  conmicicx-  than  money, 
for  in  the  great  interchanges  in  hnsinrss,  ni<  • 


in  comparison  with  credit  is  an  insignificant 
quantity. 

Mill  says,  ^^  Wealth  is  anything  which  has 
purchasing  power.''  Credit  is  as  much  wealth 
as  money  and  far  more  reaching  in  its  relations 
and  powerful  in  its  functions.  Macleod  says, 
''  Credit  is  a  circulating  medium,  exactly  as 
money  is.''  The  credit  of  a  solid,  prosperous 
industry  becomes  a  part  of  its  working  capital, 
but  safety  to  a  bank  requires  that  the  borrowings 
from  the  bank  be  represented  by  quick  assets, 
which  may  be  made  available  in  an  emergency,  or 
in  the  frequent  ^'clean-ups"  which  should  occur 
to  prove  the  liquidating  qualities  of  the  assets. 

Bank  credit,  wisely  used,  under  prudent  re- 
strictions, becomes  a  blessing  to  the  world  ;  let 
it  be  abused  and  dire  calamities  follow.  The 
banker  who  does  not  by  wise  discrimination 
become  the  sagaciously  used  instrument  by  which 
credit  is  guarded  against  its  enemies,  is  a  foe  to 
business  and  generally  wrecks  his  own  fortune 
or  the  trust  he  represents. 

Too  liberal  credit  and  the  tendency  of  borrow- 
ers to  use  it  in  an  imw^arranted  manner,  has  always 
been  a  destructive  obstacle  in  the  way  of  sub- 
stantial  progress.     It  has   ruined   many   honest 


men  by  leading  them  into  obligations  they  could 
not  meet,  when  if  they  had  been  wisely  guided 
by  their  bankers,  they  would  have  won  victories 
rather  than  have  suffered  defeats.  While  money 
was  easily  obtained,  they  unduly  extended  their 
business.  Periods  of  depression  will  come  when 
rapid  liquidation  is  a  necessity.  Monetary 
affairs  become  agitated,  capital  seeks  refuge  by 
withdrawal,  and  negotiations  become  practically 
an  impossibility. 

Unrestricted  liberty  to  borrow  is  a  curse  to 
both  borrower  and  lender,  for  it  is  sure  to  be 
followed  by  inflation  and  over-production — over- 
production by  a  crisis  whose  disastrous  influence 
is  only  measured  by  the  extent  of  the  abuse 
which  prevailed  when  the  disaster  was  gen- 
erating. 

Over-confidence  always  inaugurates  unwar- 
ranted hazards,  resulting  in  the  financial  death 
of  the  over-trader  or  over-producer,  whose  epi- 
taph might  properly  read,  *'  Killed  by  imprudent 
credit.'^ 

The  tendency  to  speculate  is  the  bane  of  busi- 
ness, and  the  enemy  of  banking.  A  merchant, 
manufacturer  or  other  seeker  after  unsecured 
credit,  who  speculates,  should  be  discriminated 


against  by  a  money  lender.  I  believe  if 
more  rigid  restrictions  were  made  in  the  begin- 
ning, and  more  unrelenting  exactions  enforced 
in  settlements  with  insolvent  debtors,  credit 
would  not  be  so  cheap,  and,  further,  that  fewer 
failures  would  occur. 

VALUE-HOW  DETERMINED. 

Legitimate  credit  is  founded  on  value,  value 
of  money,  and  value  of  commodities  interchange- 
able into  money.  A  promise  to  pay  has  value, 
and  becomes  the  equal  of  money  when  confi- 
dence in  the  promise  is  established.  A  pauper's 
written  promise  to  pay  one  hundred  thousand 
dollars  would  not  receive  the  second  glance,  but 
a  similar  promise  of  a  Rothschild  would  be 
eagerly  sought  after,  and  be  convertible  in  any 
money  center  of  the  world — proving  conclusively 
that  a  mere  promise  to  pay  without  actual  pro- 
perty of  current  value  behind  it,  is  worthless. 

Money  is  by  no  means  the  only  capital  on 
which  credit  is  based.  Capital  covers  all 
economic  elements  of  value,  such  as  skill,  in- 
tegrity, character  and  labor.  The  foundryman 
buys  pig-iron  on  credit;  he  adds  brains,  skill, 
labor  and  reputation  for  probity,  and  sells  the 


product.  He  makes  a  profit  not  only  on  the  raw 
material  originally  purchased,  but  on  the  labor 
of  making  and  selling.  The  quality  of  his 
product  not  only  depends  upon  the  skill  in 
making,  but  on  the  judgment  and  integrity  in 
buying  the  material.  A  deserved  reputation  for 
a  high  grade  product,  for  which  there  is  a  de- 
mand, insures  success  in  business. 

It  is  generally  true  in  the  economics  of  life 
that  whatever  contributes  to  the  alleviation  of 
human  want  is  valuable,  and  he  who  has  it  under 
unrestricted  control,  with  confidence  in  his  in- 
tegrity and  fairness,  has  credit.  It  may  then  be 
said  that  the  sum  of  man's  want  is  the  measure 
of  all  value.  Whatever  commodity  therefore 
meets  universal  want  is  the  nearest  to  quick 
realization,  because  it  can  at  any  moment  be 
changed  into  money.  Hence  it  is  that  Board  of 
Trade  collaterals,  duly  inspected,  properly  regis- 
tered and  in  the  custody  of  independent  and 
responsible  warehousemen,  are  acceptable  to 
prudent    bankers. 

The  economic  law  under  which  quantity  de- 
termines value,  is  higher  than  any  statute  that 
can  be  enacted,  hence  all  legislation  must  be 
subservient  to  this  law. 


It  is  true  that  the  law  of  supply  and  demand 
finally  fixes  the  value  of  all  commodities.  De- 
mand makes  commerce  possible.  Supply  is  the 
child  of  demand.  Without  demand  there  can 
be  no  value;  profit  implies  a  buyer  and  a  seller. 
It  has  been  said,  '^  The  value  of  a  thing  is  what 
it  can  be  sold  for."  Certain  it  is  that  nothing 
has  a  commercial  value  unless  somebody  wants  it. 

The  shrewd  merchant  of  integrity  makes  a 
desirable  bank  customer  and  subject  of  credit, 
because  he  studies  carefully  the  wants  of  the 
community  where  he  is  located,  and  the  territory 
tributary  thereto,  and  buys  to  meet  the  desires 
of  the  people  as  nearly  as  possible.  Intuitively, 
he  finds  himself  recognizing  the  fact  that  educa- 
tion ripens  civilization,  that  civilization  creates 
desires  unknown  to  the  uncultured,  and  that  the 
higher  the  order  of  civilization  the  more  aesthetic 
the  wants,  and  the  keener  the  demand  for  the 
products  of  modern  skill.  Hence  he  intelligently 
adapts  his  purchases  to  the  special  conditions 
which  surround  him. 

Credit  enables  the  merchant  to  buy  goods  and 
the  manufacturer  to  purchase  raw  materials  to 
make  them  into  a  merchantable  commodity,  so 
they  will  sell  at  a  profit;  therefore  credit,  as  well 


as  money,  gives  life  to  labor,  which  invests  all 
the  products  of  the  earth  with  value.  Labor  is 
vital  to  the  prosperity  of  an  individual  or  nation. 
A  nation  of  industry^  and  economy  becomes  a 
nation  of  wealth,  for  wealth  is  their  legitimate 
fruit.  Beecher  says  "  Industry  is  the  parent  of 
thrift.''  Carlyle  says,  *' Labor  is  a  celestial  es- 
sence breathed  into  man  by  Almighty  God." 

The  influence  of  honest  labor,  intelligently 
directed,  never  ceases ;  it  accumulates  force  as 
interest  accumulates  power.  Labor  perfonned 
by  the  buried  millions  is  molding  destiny  in  the 
present  hour.  What  has  been  done  in  the  past 
is  an  inspiration  to  us  to  make  improvement 
and  advancement  in  the  present,  and  to  aid  us 
we  have  the  advantage  of  accumulated  intelli- 
gence and  skill  developed  through  the  past  ages. 
What  we  owe  the  past,  with  increased  obligations, 
the  future  will  owe  us,  if  we  make  an  honest 
use  of  the  energies  and  abilities  given  us.  The 
wise  man  profits  by  the  experience  of  the  past. 
The  man  who  does  not  permit  the  past  to  become 
a  teacher  for  the  present,  need  have  no  hope  of 
the  future. 


MONEY-ITS  RELATION  TO  CREDIT. 

Money,  or  credit,  its  equivalent,  wisely  used, 
becomes  a  power  in  civilization,  for  it  creates 
opportunities  for  labor,  develops  the  resources  of 
the  country,  and  lights  the  way  to  progress  and 
independence. 

It  has  been  said,  '^  Money  is  simply  a  com- 
modity employed  for  bartering,  as  the  ship  for 
carrying,  or  the  plow  for  farming ;  it  is  wealth 
only  in  the  identical  sense  that  the  cart  is,  for  its 
action  is  similar  to  the  cart's — it  fetches  to  the 
owner  what  he  is  in  want  of." 

Money  enters  into  credit  as  a  medium  of  ex- 
change, and  measures  the  value  of  all  com- 
modities. Money  that  fluctuates  soon  goes  into 
disgrace,  while  in  its  flight  to  dishonor  it  par- 
alyzes credit  and  crucifies  progress.  Debased 
money  becomes  a  pernicious  influence  in  busi- 
ness, is  born  in  ignorance  or  infamy,  is  a  blighting 
curse,  an  emissary  of  Satan,  bearing  weapons  of 
destruction  to  all  industrial  interests — is  a  viper 
that  will  sting  prosperity  and  independence  to 
death. 

An  inexorable  and  irrevocable  law  governs  the 
nation  as  well  as  the  individual.     A  nation  can 


no  more  be  dishonest  and  be  respected  than  an 
individual. 

It  has  been  said,  **  Financial  probity  is  the 
backbone  of  a  nation.''  A  nation  that  sacrifices 
its  honor  by  repudiation  of  its  honest  obligations, 
in  whole  or  in  part,  will  pass  into  history  under 
a  stigma  that  centuries  of  honorable  record  can- 
not remove.  The  greatest  monetary  disasters 
known  in  history  were  inaugurated  by  the  at- 
tempt to  create  value  in  money  where  none 
existed. 

Money,  not  based  on  something  of  intrinsic 
value  of  recognized  standard  to  redeem  it,  should 
be  prohibited  from  circulation  as  you  would  pro- 
hibit counterfeiting.  Let  the  foundation  on 
which  money  rests  be  honest,  the  standard  true, 
and  all  operations  growing  out  of  same  will  be 
satisfactory. 

Evidences  of  indebtedness,  passing  as  money, 
must  be  based  on  unquestioned  security,  con- 
vertible into  an  established  metal  standard  which 
the  whole  world  recognizes  as  such,  in  order  to 
give  stability  to  currency  and  safety  to  business. 
No  substitute  can  be  safely  offered  for  money  not 
worth  just  what  it  purports  to  be.  A  govern- 
ment has  no   moral   right  to  impose  upon  its 


subjects  by  stamping  anything  as  a  dollar  worth 
only  half,  or  worth  any  less  sum  than  it  stands 
for.  It  has  no  right  to  discriminate  against  the 
product  of  one  State,  which  happens  to  be  corn, 
wheat  or  potatoes,  in  favor  of  the  product  of 
another  State,  which  happens  to  be  metal — 
because  the  owners  of  the  latter  are  clamoring 
for  unlimited  purchase  at  a  fictitious  price.  It 
has  no  right  to  tax  the  whole  people  for  the 
benefit  of  a  single  industry,  at  the  expense  of 
all  other  industries. 

It  is  an  absurdity  to  say  that  a  government  has 
the  power  to  fix  the  value  of  money  ;  it  may 
arbitrarily  compel  its  acceptance  in  payment  of 
debts  within  the  jurisdiction  of  the  power  issuing 
it,  but  beyond  that  jurisdiction  it  is  worth  only 
its  actual  value,  and  reflects  credit  or  discredit 
just  in  proportion  as  it  is  measured  by  the 
standard  recognized  as  such  by  all  nations. 

When  money,  without  reference  to  its  true 
value,  is  plentiful,  prosperity  ma}-  apparently 
abound,  and  demagogues  may  applaud  its  super- 
ficial evidences,  but  as  a  matter  of  fact  the  finan- 
cial atmosphere  will  be  charged  with  peril,  and 
the  prudent,  observing  the  signal  of  danger,  will 
hoard  gold  in  order  to  have  something  of  certain 


purchasing  power  when  the  crash  comes.  Col- 
laterals may  be  abundant,  but  money,  like  a 
frightened  deer,  has  sought  safety  in  hiding, 
thus  impoverishing  the  ability  of  banks  to  meet 
the  necessities  of  business.  Yet  the  public,  over- 
looking the  true  cause  of  restricted  lines,  unkindly 
criticises  the  banks,  charging  illiberality  and  un- 
fair treatment,  while  the  fact  is  the  depositors  are 
in  fault,  not  the  banks. 

Unsound  money  inflates  values,  incites  extrava- 
gance, promotes  wild  schemes,  is  a  curse  because 
it  produces  false  conditions,  destroys  stability  in 
business  and  ends  in  disaster.  The  greatest 
sufferer  is  the  laborer  whose  fortune  as  a  rule 
consists  chiefly  of  his  daily  earnings. 

Debased  money  impoverishes  and  ruins  the 
wage  earner ;  ''  An  honest  dollar  for  an  honest 
day's  work,''  should  be  his  war-cry.  His  skill, 
integrity  and  energy  are  made  available  only 
when  supplemented  by  the  opportunity  for  work 
which  capital  alone  can  give.  The  interests  of 
capital  and  labor  are  identical ;  each  has  rights 
which  must  be  respected  and  protected  upon  an 
equitable  basis,  or  there  can  be  no  permanent 
success.  You  destroy  one  and  xou  ruin  the 
other — you  protect  one  and  you  save  the  other ; 

13 


any  intelligent  man,  who  honestly  desires  to 
promote  the  interests  of  either,  will  frankly 
say  so. 

Sonnd  ^' money  is  a  form  of  capital  which 
stimulates  and  facilitates  all  the  processes  of 
business,'^  and  largely  divests  credit  of  its  peril. 
Restore  confidence,  and  new  life  will  be  given  to 
all  industries,  and  the  onward  march  to  tri- 
umphant success  will   be  assured. 

Scarcity  of  money  in  circulation  does  not  prove 
diminution  in  the  quantity  in  existence,  but  the 
loss  of  confidence  to  use  it,  and  that  does  the 
mischief  in  credit  and  damage  to  business.  It 
is  then  that  the  quality  of  money  is  determined, 
proving  the  statement  often  made  that  ''  inferior 
money  always  drives  out  superior." 

We  all  know  that  gold  is  hoarded  and  drops 
out  of  circulation  w^hen  confidence  flees  and 
panics  threaten.  Gold  is  something  everybody 
wants,  because  of  the  universal  faith  in  its  value. 
The  most  prudent  investors  in  all  countries  de- 
mand that  the  securities  they  invest  in  shall  be 
made  payable  in  gold,  not  for  the  purpose  of 
discriminating  against  any  other  form  of  money, 
but  because  gold  holds  commercial  supremacy 
everywhere  ;  is  as  current  in  the  most  remote  and 

14 


humble  village  in  the  world  as  in  the  most  im- 
portant money  center.  This  is  not  true  of  any- 
other  form  of  money. 

Is  it  not  a  fact  that  purchases  and  sales  of 
commodities,  whether  for  cash  or  credit,  in  spite 
of  legislation,  are  made  on  a  gold  basis?  A 
merchant  of  one  country  selling  to  a  merchant 
of  another  country,  making  silver  a  standard, 
will  surely  require  his  bills  to  be  paid  in  gold,  or 
sell  the  goods  at  such  a  profit  as  to  provide 
against  the  fluctuating  value  of  an>-  other  fonn 
of  money. 

CREDIT-FOUNDATION-NECESSITY. 

Under  the  most  advantageous  conditions  of 
money  and  credit,  exhaustive  duties  and  supreme 
anxieties  are  the  inevitable  inheritance  of  a 
bank  officer,  where  fidelity,  patience  and  a  true 
conception  of  the  magnitude  and  sacredness  of 
his  trust  qualify  him  for  his  position.  The 
banker,  wise  in  his  own  conceit,  who  super- 
ciliously assumes  superiority  and  infallibility, 
demonstrates  his  ignorance  and  weakness.  Ener- 
getic ignorance  is  often  more  dangerous  than 
criminal  intent ;  the  latter  may  be  controlled 
and  intelligently  feared — the  former,  never. 


Credit  is  the  foundation  of  banking,  and  the 
banker  in  making  his  credits  has  always  been,  and 
ever  will  be,  the  legitimate  prey  of  inflationists, 
swindlers  and  thieves  in  general,  who  use  every 
kind  of  ingenuity  and  cunning  skill  to  secure 
his  confidence  and  get  his  money — so  that  peril 
shadows  his  pathway  at  every  step.  An  ex- 
perienced banker  will  tell  you  at  times  the  pres- 
sure is  terrific,  and  the  responsibilities  almost 
overwhelming. 

Mutual  confidence  is  the  foundation  of  all  suc- 
cessful enterprises.  It  is  well  understood  that 
no  bank  can  pay  its  debts  on  demand,  but  that 
time  is  required  to  make  available  the  most 
solvent  securities.  If  a  bank  were  obliged  to 
keep  itself  in  position  to  pay  it  creditors  on  de- 
mand, there  would  be  no  profit  in  banking. 

Walker  says,  ^^  If  a  man  borrows  a  thousand 
ducats  and  ties  them  up  in  a  bag,  he  will  not 
find  any  little  ducats  at  the  end  of  the  year,  but 
if  he  purchases  a  flock  of  sheep,  he  will,  with 
proper  attention,  have  lambs  enough  at  the  end 
of  the  year  to  pay  a  handsome  interest  on  the 
loan  and  have  a  splendid  profit  for  himself.'' 

Credit  is  a  necessity  in  banking.  Risk  will  be 
in  proportion  to  gain ;  nothing  offers  profit  that 

16 


does  not  present  a  corresponding  risk.  A  credit 
which  a  merchant  may  make  with  propriety,  a 
banker  cannot  seriously  consider.  While  the 
same  general  principles  must  control,  the  per- 
centage of  profit  in  one  case  warrants  the  risk, 
and  in  the  other  case  it  does  not.  For  an  nnwar- 
ranted  hazard  there  can  be  no  satisfactory-  com- 
pensation. 

It  is  the  legitimate  desire  of  ever>'  banker 
to  increase  the  bnsiness  of  his  bank  ;  how  to  do 
this  safely  is  the  problem  of  his  life,  in  the 
solution  of  which  he  will  inevitably  make  mis- 
takes, and  largely  increase  his  stock  of  regrets. 
To  lament  will  be  nnavailing;  charging  to 
^'Experience  Account*'  does  not  make  satisfactory 
explanations  or  dividends.  Stockholders  quickly 
forget  a  bank  officer\s  triumphs,  but  luvrr  liis 
mistakes. 

TOO    MUCH    MONEY    DANGEROUS. 

It  is  true  that  at  certain  periods  money  will 
accumulate  rapidly.  An  ambitious  bank  officer, 
desiring  to  make  attractive  dividends,  is  liable  to 
be  led  into  the  inauguration  of  a  system  dan- 
gerous in  its  character  and  sometimes  fatal  in  its 
consequences.     Over-anxiety  to   lend    money  is 


perilous  ;  it  divests  judgment  of  its  prudence  and 
scrutinizing  power,  makes  the  banker  over- 
credulous  and  liable  to  inflate  securities  with 
fictitious  value.  The  universal  experience  of 
bankers  will  justify  the  statement  that  the 
greatest  mistakes  are  made,  and  the  most  disas- 
trous losses  incurred  through  loans  taken  on 
when  there  is  a  plethora  of  money.  Under  the 
influence  of  a  stringency,  greater  care  and  closer 
scrutiny  are  exercised ;  borrowers  seek  the 
banker,  not  the  banker  the  borrowers.  It  is 
then  a  banker  can  get  the  cream  and  let  the 
skim-milk  go  to  the  lender  where  usury  is  not 
considered. 

WHOM    SHALL    I    TRUST? 

A  banker  has  a  great  variety  of  borrowers  to 
deal  with.  He  should,  as  far  as  possible,  make 
it  his  duty  to  know  each  man's  peculiarities  and 
business  methods.  In  some  he  will  find  frankness 
personified ;  they  will  open  their  hearts  and  give 
their  confidence,  so  that  their  banker  is  placed 
in  possession  of  all  the  facts  connected  with  their 
business.  Others  apparently  will  be  equally 
frank,  but,  as  a  matter  of  fact,  will  conceal  vital 
points,  so  that  a  correct  judgment  of  their  affairs 

18 


is  an  impossibility.  Others  will  inflate  their 
statements,  and  by  rosy  pictures,  mislead ;  the 
latter  may  be  honest  in  their  intentions,  but  they 
lack  discriminating  judgment,  and  often  deceive 
themselves.  Others  will  willfully  misrepresent 
their  condition  with  such  plausibility  and  cun- 
ning as  to  deceive  the  wisest,  so  that  the  ques- 
tion that  comes  home  to  every  banker,  "Whom 
shall  I  trust  ?'^  is  forever  pertinent.  It  will  also 
ever  remain  a  perplexing  proposition  to  know  to 
what  extent  credit  can  be  given  with  safety, 
what  methods  shall  be  used  to  determine  the 
solvency  of  a  borrower  and  the  value  of  the  col- 
laterals. In  making  credit  it  has  been  my  habit 
to  ask  myself: 

1st.  Is  the  applicant  for  credit  honest?  Is  he 
truthful  ?     Can  his  statements  be  relied  upon  ? 

2nd.  What  do  his  assets  consist  of?  Are  they 
staple  and  in  healthy  demand  a  reasonable  part 
of  every  year  ?  There  are  certain  classes  of  goods 
or  products  that  are  short-lived  in  their  use ;  they 
may  sell  quickh'  to-day  and  in  the  near  future  be 
unsalable  at  any  price.  Any  commodity  de- 
pendent upon  current  conditions  may  have  a 
brief  period  of  life,  and  after  that  become  prac- 
tically worthless. 

10 


Again,  what  are  the  borrower's  estimates  of 
value?  Are  his  assets  quick  or  are  they  slow? 
What  would  they  be  worth  in  liquidation  under 
pressure?  Has  he  sufficient  capital,  with  what 
the  bank  will  lend  him,  to  successfully  conduct 
his  business  ? 

3rd.  If  the  proposed  borrower  is  doing  a 
general  business,  is  it  so  distributed  as  not  to  be 
dependent  upon  one  locality,  where  a  failure  of 
crops,  disaster  by  fire  or  any  other  calamity  would 
cause  embarrassment  ? 

4th.  Has  he  a  practical  knowledge  of  his 
business,  and  does  it  warrant  success?  Is  he 
making  money?  A  losing  business  should 
always  be  avoided  by  the  lender  of  money, 
even  if  the  assets  are  sufficient  when  the  loan 
is  made.  To  continue  to  produce  at  a  loss 
makes  ultimate  bankruptcy  certain.  The  date 
of  bankruptcy  depends  only  on  the  size  of  the 
bank  account  or  the  amount  of  available  assets 
in  the  beginning.  The  same  line  of  business 
may  at  one  time  be  profitable  and  at  another 
time  unprofitable,  so  that  the  closest  touch  w^ith 
and  clearest  conception  of  prevailing  conditions 
of  trade  become  vitally  important  to  the  banker. 

5th.  Does  the  borrower  confine  himself  to  his 
20 


legitimate  business  and  keep  out  of  speculation  ? 
If  his  business  involves  credit  to  other  people,  is 
he  prudent  in  his  methods  of  making  such  credit, 
and  wise  in  his  judgment  of  character?  Is  he 
dependent  upon  sources  outside  of  his  regular 
business  for  his  success  or  failure,  or  so  identified 
with  other  interests  as  to  be  imperilled?  The 
collapse  of  a  large  concern  often  carries  many 
others  with  it.  Hence  the  importance  of  know- 
ing all  the  business  relations  of  the  borrower. 

6th.  If  a  nlanufacturer,  has  he  sufficient  bills 
and  accounts  receivable,  or  other  quick  assets,  to 
pay  his  liabilities  ?  Experience  has  proven  con- 
clusively to  every  money  lender  that  machinery 
and  plants  make  poor  assets  to  pay  debts  with ; 
especially  is  this  true  if  the  owner  meets  with 
misfortune.  Methods  pursued  by  manufacturers 
in  charging  off  or  failing  to  charge  off  each  year 
an  equitable  percentage  for  depreciation  in  ma- 
chinery^ and  plant,  is  a  true  index  to  their  pni- 
dence  or  lack  of  it.  Location  of  plant  is  also 
a  vital  question.  What  is  the  power  used?  If 
water,  is  it  in  regular  supply,  or  a  fluctuating 
quantity,  demanding  a  large  expenditure  of 
money  to  keep  it  in  operation?  Is  there  an 
abundance   of  raw  materials  used    in    manufac- 


turing  the  products,  tributary  and  accessible,  or 
is  the  supply  limited  ?  Location  and  the  condi- 
tions referred  to  might  determine  the  permanency 
of  an  industry  and  solve  the  safety  of  a  credit. 

7th.  Is  the  customer  borrowing  money  to 
increase  his  lending  facilities?  A  banker  or 
broker  who  becomes  a  borrower  of  money  to 
lend  again,  should  always  be  willing,  and  be  re- 
quired to  pledge  as  collateral  for  his  borrowings, 
with  satisfactory  margin,  the  securities  which  he 
buys  or  lends  upon.  This  rule  sTiould  be  abso- 
lute, without  reference  to  the  financial  strength 
or  high  credit  of  the  borrower,  for  it  is  a  safe- 
guard against  undue  expansion.  The  ability  to 
borrow  money  at  a  low  rate  to  lend  at  a  higher 
rate  creates  a  temptation  pregnant  with  danger, 
hence  safety  to  both  borrower  and  lender  de- 
mands that  the  most  conservative  judgment  and 
prudent  methods  should  obtain. 

8th.  What  kind  of  an  account  does  the  cus- 
tomer keep?  An  important  feature  in  deter- 
mining the  amount  of  credit  to  be  extended, 
other  conditions  being  right,  is  the  bank  balance 
which  a  customer  carries,  or  shall  be  required  to 
carry.  The  percentage  demanded  varies  largely 
with  banks,  so  that  no  universal  rule  has  been 


adopted.  Certain  it  is  that  a  healthy  balance 
shonld  be  carried  ;  it  is  wiser  for  the  customer, 
as  well  as  equitable  to  the  bank.  An  average 
balance,  not  less  than  a  sum  equal  to  the  reserve, 
which  a  bank  must  by  law  carry  against  a  cus- 
tomer's deposit,  should  work  no  hardship  to  bank 
or  customer,  and  its  results  would  be  more  satis- 
factory to  both.  The  customer  should  never  lose 
sight  of  the  fact  that  whether  a  shareholder  or 
not,  he  is  vitally  interested  in  the  character  and 
prosperity  of  his  bank,  and  that  when  he  makes 
unreasonable  demands  upon  his  banker,  he  com- 
mits a  wrong  upon  himself.  The  selection  of  a 
conservative  and  wisely  managed  bank  reflects 
credit  upon  the  judgment  and  standing  of  the 
customer. 

9th.  Is  the  applicant  for  credit  an  officer  of 
a  correspondent  bank  ?  I  do  not  approve  of  the 
habit  indulged  by  some  bank  officers — i.  e.,  ask- 
ing their  correspondents  in  money  centers  for 
loans,  offering  as  collateral  security  the  stock  of 
their  bank  and  basing  their  claims  for  considera- 
tion upon  the  value  of  their  bank's  account.  The 
policy  is  bad  for  several  reasons,  but  principally 
because  they  demand  a  privilege  which  ( except  as 
to  kind  of  collateral )  legitimately  belongs  to  their 

23 


bank  only,  and  may  be  needed  to  protect  their 
bank  in  special  cases  where  borrowing  may  be 
good  policy,  or  emergencies  where  it  may  be  a 
necessity.  To  secure  these  personal  loans,  bank 
officers  often  make  unwarranted  concessions,  thus 
belittling  the  profit  which  is  the  natural  inherit- 
ance of  their  bank,  and  then  they  deprive  their 
bank  of  the  independent  position  which  commands 
the  highest  respect  of  conservative  men  whose 
influence  is  of  value  because  it  establishes  con- 
fidence and  brings  good  business. 

One  prominent  bank  officer  said  to  me  that  he 
never  accepts  a  borrowing  account  without  asking 
who  the  legal  counsel  of  the  borrower  is.  I  think 
the  suggestion  a  good  one.  Certain  it  is  that  a 
wise,  discreet,  honorable  lawyer  is  of  priceless 
value  to  business  interests — he  who  holds  com- 
mercial honor  and  public  weal  above  personal 
gain.  There  are  pirates  in  the  legal  as  well  as 
quacks  in  the  medical  and  frauds  in  the  banking 
profession.  Wherever  you  find  either  you  are  sure 
to  find  a  malignant  foe  to  the  true  interests  of 
humanity.  This  statement  only  emphasizes  the 
value  of  an  able,  conscientious  follower  of  either 
calling. 

Again,  if  the  proposed  borrower  is  a  corpora- 

24 


tion,  the  banker  should  be  sure  that  the  men  in 
active  management  have  large  personal  interests 
at  stake — with  only  a  salary  at  risk  the  bank- 
ruptcy of  the  industry  is  npt  so  alanning  to  the 
officers.  I  believe  a  rule  requiring  directors  of  a 
corporation  to  personally  guarantee  its  borrow- 
ings from  its  bank  to  be  an  important  element  of 
safety.  Directors  can  always  protect  themselves 
by  protecting  the  bank.  No  motive  has  greater 
power  than  that  which  prompts  self-protection. 

There  are  many  other  questions  which  may  be 
legitimately  asked,  but  if  able  to  answer  the  fore- 
going satisfactorily,  a  reasonably  safe  foinidation 
for  credit  is  established. 

METHODS   AND   SOURCES  OF  INFORMATION. 

There  is  a  variety  of  sources  for  getting  at  the 
facts  as  to  a  customer's  standing,  all  of  which  a 
prudent  banker  will  use,  but  in  his  final  judg- 
ment he  must  rely  upon  his  confidence  in  the 
integrity,  fidelity  and  business  ability  of  the 
customer.  Personal  contact  with  the  borrower, 
familiarity  with  his  habits,  methods  and  charac- 
teristics, are  invaluable  aids  in  determining  whom 
to  trust.  Only  education,  long  experience  and 
patient  thought  can  bring  the  wisdom  necessar>' 


for  a  solid  foundation  on  which  to  determine 
credit,  and  even  then  errors  of  judg-ment  will 
creep  in. 

It  will  be  helpful,  in  avoiding  complications, 
for  a  banker  never  to  lose  sight  of  the  fact  that  one 
careless  action,  one  single  mistake,  where  trans- 
actions are  large,  or  relatively  large,  will  swallow 
up  a  whole  year's  profits,  accumulated  by  his 
previous  prudence,  faithful  study  and  skilled 
discrimination;  hence  prudent  and  critical  in- 
vestigation should  be  made,  and  careful  con- 
sideration given,  before  decision  is  reached. 
When  this  is  done  and  wisest  judgment  used, 
self-reproach  is  unwarranted. 

A  successful  banker  believes  in  men.  Inspire 
a  man  with  the  belief  that  another  trusts  him 
implicitly,  and  his  manhood  will  be  exalted, 
his  trustworthiness  will  be  largely  increased  and 
intensified.  The  power  to  make  men  believe 
that  you  trust  them,  and  thus  forcibly  appeal  to 
their  higher  nature,  is  a  quality  nowhere  more 
valuable  than  in  a  banker.  Such  a  banker  will 
also  be  fair  to  his  customers ;  he  will  never 
sacrifice  where  he  can  save.  He  should  be  a 
genuine  man  who  despises  pretense.  His  educa- 
tion unavoidablv  g-ives  him    an    intense    hatred 


for  sluuns.  Ik  will  strive  to  make  himself 
a  recoo;nize(l  standard  of  honor  and  fairness,  for 
his  important  trusteeship  makes  him  a  vital  part 
of  the  civilization  under  which  he  lives.  He 
will  also  ever  remcinhn  that  misfortunes  are 
liable  to  overtake  any  customer,  and  if  wise,  he 
will  judiciously  distribute  his  risks,  keep  him- 
self in  touch  with  his  customers,  show  an  active, 
kindly  interest  in  their  success ;  have  them 
implicitly  believe  that  the  bank  is  not  only  a 
safe  depository  for  their  money,  but  its  officers  for 
their  business  secrets,  and  so  treat  his  customers 
in  his  intercourse  with  them  that  they  will  not 
leave  him  because  his  competitor  offers  what  may 
seem  more  attractive  inducements  ;  and  so  that  in 
financial  trouble  he  will  be  the  first  one  consulted 
and  his  bank  protected.  This  result  can  only  be 
secured  throuo^h  uniform  courtesy,  fair  treatment 
and  fidelity  to  all  confidences  bestowed. 

DIRECTORS-THEIR    DUTIES. 

A    common    error    with    hank    ofil  the 

lu-^U'ct  to  make  axailahk-  the  inthu-nce  and 
knowledge  of  tlu  directors  of  the  bank.  Kvery 
director,  in  acce])tin<^  his  position,  assumes  a 
rc'sp«>n.si])ilily  fur  which  he  .^hoiiKl  Ik-  held  .strict- 
er 


ly  accountable.  Should  trouble  come  to  the 
bank,  the  plea  of  ignorance  of  the  bank's  affairs 
should  in  no  way  mitigate  the  charge  of  in- 
fidelity to  his  trust.  A  bank  officer  should  give 
his  full  confidence  to  the  directors,  who  are  co- 
trustees with  him,  and  in  just  reciprocity  they 
should  give  him  their  unqualified  confidence 
and  co-operation,  and  to  the  bank  their  best 
efforts  in  protecting  the  business  in  hand,  and 
in  the  getting  of  new  business.  The  reputation, 
character,  safety  and  prosperity  of  the  bank 
should  be  as  vitally  important  to  them  as  their 
own,  because  in  accepting  the  trusteeship,  they 
have  assumed  a  sacred  duty,  and  their  reputa- 
tion becomes  at  once  involved. 

COMMERCIAL   AGENCIES. 

It  is  wisdom  for  a  banker  in  forming  judgment 
of  a  credit  to  avail  himself  of  the  reports  of  the 
reputable  commercial  agencies,  who  have  un- 
equalled facilities  for  getting  information,  and 
who  make  it  their  business  to  learn  the  histories 
of  men,  what  their  records  have  been  as  to 
integrity,  promptness  and  success. 

A  valuable  aid  in  making  credits  would  be  a 
central  Bureau  of  Information,  accessible  to  all 


bankers  who  desire  to  make  it  so.  To  be  able 
to  use  paper  at  will  is  a  practice  pregnant  with 
danger.  If  borrowers  knew  that  all  their  paj^er 
given  was  reported  to  the  Central  sonrce  referred 
to,  it  might  make  a  very  material  difference  in 
their  operations,  and  result  in  greater  safety  to 
lenders. 

WHAT  TO  AVOID. 

Bankers  should  learn  to  avoid  a  great  weak- 
ness, common  and  dangerous,  which  is  the  lack 
of  courage  to  charge  off  a  loss  when  tempted  to 
risk  more  money,  hoping  to  thereby  ultimately 
save  the  bank  hannless.  The  most  serious 
disasters  have  come  to  a  bank  when,  under  the 
appalling  influence  of  a  large  loss,  additional 
money  has  been  contributed  with  the  hope  of 
final  escape.  Where  a  strong  competition  exists, 
an  over-anxiety  to  keep  customers  will  also  exist 
and  will  prove  a  menace  to  safety.  Bitter 
ri\alry  is  thereby  created  and  judgment  is  di- 
vested of  its  prudence  and  sagacity.  Under  its 
influence  indiumient^  tlinf  are  unwarranted  are 
often  oflfcird.     A   di  ckoning  will  surely 

come.  riu  11  iIk  pnukiit  stand  and  the  reckless 
fall. 


As  a  rule,  the  wealth  of  men  is  overesti- . 
mated ;  profits  are  magnified  and  losses  be- 
littled. The  wise  credit  man  largely  discounts 
the  public  estimates  of  the  wealth  of  business 
men.  Industries  that  have  had  a  high  credit 
and  have  been  unhesitatingly  trusted,  will  sud- 
denly fail  and  the  expose  becomes  an  awful 
shock  to  confidence ;  the  lender  will  find  that 
through  the  lack  of  proper  investigation  he  has 
unconsciously  contributed  to  the  borrower's  ruin, 
who  in  turn  by  his  failure  has  ruined  other 
customers  of  the  bank. 

An  insight  into  a  conservative,  sagacious 
banker's  credit  case  might  make  revelations  to 
some  people  posing  as  models  of  honor  and 
possessors  of  wealth  that  would  astonish  them. 
Rest  assured  they  are  not  always  attractive 
pictures,  and  in  some  cases  they  might  be  quite 
as  astonishing  to  the  community,  as  will  be  the 
secrets  of  life,  when  the  veil  is  lifted  on  Judg- 
ment day. 

ANALYSIS  OF  ACCOUNTS. 

I  think  any  successful  banker  will  say  that  a 
careful  analysis  of  a  customer's  account  gives  to 
him  an  index  uniformly  reliable  in  its  correct- 


ness.  Men  mifainiliar  with  bank  records  little 
dream  of  the  graphic  histories  they  disclose. 
One  customer  will  always  have  a  solid  cash 
balance,  his  account  needs  no  watching,  his 
banker  thinks  of  him  only  with  pleasure.  An- 
other will  pinch  his  account  and  make  his  bank 
a  convenience  only.  Some  balances  will  be 
made  up  of  checks  on  other  banks,  in  or  out  of 
the  city,  taken  legitimately  perhaps  in  the 
routine  of  business,  but  nevertheless  the  receiv- 
ing bank  actually  never  has  any  money  in  hand 
from  these  accounts ;  each  day^s  drawings  will 
absorb  the  previous  day's  deposits.  And  so  it 
will  go  on  indefinitely. 

There  are  customers  who  consider  their 
accounts  so  valuable  to  their  bank  that  in 
addition  to  depositing  their  country  checks 
(which  may  take  from  one  to  ten  days  upon 
which  to  get  returns)  they  will  want  these 
checks  collected  without  charge,  which  results 
in  the  city  bank  paying  for  the  privilege  of 
doing  such  customers'  business,  and  is  wTong  in 
principle.  As  a  matter  of  fact,  there  should  \ye 
some  profit  on  every  transaction  a  bank  makes, 
especially  on  exchange  and  collection.  Through 
competition    unwarranted  concessions  are  made 

n 


so  that  important  elements  of  profit  are  elimin- 
ated from  banking.  The  acceptance  b}^  the  city 
merchant  of  the  country  merchant's  check  on 
his  local  bank  is  bad  practice  and  ought  to  be 
discouraged  by  metropolitan  bankers.  It  is  true 
that  some  country  merchants  calculate  the  days 
it  will  take  for  their  check  or  checks  to  reach 
their  local  banker  and  make  provision  only  in 
time  to  cover,  thus  depriving  the  country  banker 
of  the  interest  to  which  he  is  legitimately 
entitled,  while  it  works  both  an  injury  upon  and 
an  inconvenience  to  the  city  banker. 

Another  customer  may  subject  his  bank  to 
great  annoyance  by  persistently  over-drawing 
his  account.  If  he  is  charged  with  interest,  he 
will  vigorously  protest,  forgetting  that  interest 
is  the  life  of  the  bank,  that  interest  never  sleeps 
and  has  no  respect  for  holidays  or  Sundays,  but 
keeps  ticking  away  as  the  pulse  keeps  beating. 

Another  customer,  and  the  one  to  be  most 
dreaded,  is  the  habitual  ^'  kiter  "  or  ^^  shinner.  '' 
This  customer  will  find  another  man  of  like 
tastes  and  needs  with  whom  he  will  swop  checks, 
sometimes  for  like  amounts,  but  usually  he 
imagines  more  shrewdly  for  unlike  amounts, 
flattering  himself  that  he  has  fooled  his  banker, — 


sad  delusion!  The  Clearinj^  House  lifts  the  veil 
and  this  customer  stands  out  in  his  true  lij^^ht. 
When  suspicions  are  aroused  by  such  evidences, 
the  banker  will  send  out  this  customer's  check, 
deposited  after  Clearings,  to  be  certified ;  usually 
it  will  come  back  with  the  familiar  stamp  **  No 
Funds. '^  If  the  depositor  can  raise  the  money 
or  some  other  obliging  man^s  cheeky  provision 
will  be  made  during  the  next  day  and  so  on  until 
he  has  exhausted  the  patience  of  his  banker,  and 
has  been  forced  to  withdraw  his  account, — when 
he  will  seek  some  other  bank  to  impose  upon  in 
like  manner. 

Another  customer  will  run  a  large  balance  for 
a  time  for  the  purpose  of  establishing  credit, 
proposing  to  himself  in  the  beginning  when 
confidence  is  won  to  make  his  bank  a  victim. 
In  due  time  he  will  have  unexpected  demands 
and  want  temporar>'  accommodation  ;  when  his 
banker  demands  security  he  will  become  incensed 
and  threaten  to  change  his  account  He  will 
probably  be  surprised  to  find  that  that  is  just 
what  his  banker  wants  him  to  do,  for  he  has 
already  become  satisfied  of  the  ulterior  purpose 
of  this  customer  and  his  kind. 


LOANS-CHARACTER  AND   DESIRABILITY. 

It  is  true  that  the  ablest  bankers  disagree  as 
to  the  kind  and  character  of  business  most  desir- 
able. One  banker  will  say,  ^*  Give  me  loans  on 
collaterals  only;  I  want  quoted  and  quick-selling 
securities  with  such  margins  as  will  make  them 
available  in  emergencies.''  In  order  to  do  this, 
a  lower  rate  of  interest  must  be  accepted,  and 
the  habitual  lender  on  collateral  is  entirely 
willing  to  make  the  necessary  concession  for  the 
absence  of  anxiety  and  the  peace  of  mind  which 
follow. 

Another  banker  will  say,  ^'  Judiciously  selected 
commercial  accounts  are  most  attractive."  To 
the  lender  on  collaterals  these  unsecured  credits 
would  be  a  source  of  anxiety,  if  not  torment. 
While  a  fair  proportion  of  each  kind  of  loans  may 
be  desirable,  I  believe,  on  the  whole,  experience 
teaches  that  the  grandest  successes  have  been 
attained  by  commercial  bankers  who  were  wise 
enough  to  properly  select  the  paper  made  by 
solvent  merchants  and  manufacturers,  who  are 
willing  and  can  afford  to  pay  a  higher  rate  than 
cash  collateral    borrowers. 

Commercial  credits  are  based  on  the  integrity 

34 


of  the  borrower,  the  prosixiuy  oi  liis  business, 
the  merchandise  or  products,  the  bills  receivable 
and  accounts  receivable  shown  by  his  books,  and 
in  his  possession,  representing  tangible  value 
held  in  trust  for  his  creditors,  and  fully  justifying 
the  bank  credit  asked  for. 

A  banker  cannot  confine  himself  to  million- 
aires; the  small  merchant  and  manufacturer 
must  be  accommodated  with  banking  facilities, 
as  well  as  the  merchant  prince;  and  these 
borrowers  are  just  as  safe  for  the  amounts  loaned 
— perhaps  safer  than  those  possessing  larger 
means  with  larger  wants. 

It  may  be  accepted  as  true  that  the  bank  which 
has  the  largest  number  of  small  borrowers  who 
are  prosperous  is  in  the  best  possible  position 
to  earn  dividends.  Better  rates  of  interest  are 
obtained  on  small  amounts,  larger  profits  on 
exchange,  better  average  balances  in  projxjr- 
tion  to  the  amount  loaned,  and  the  liability  to 
large  losses,  even  in  the  aggregate,  is  much 
lessened. 

Among  the  most  desirable  loans  for  a  bank  to 
make  is  where  one  merchant  or  manufacturer 
sells  goods  to  another  merchant  or  manufacturer, 
or  a  producer  of  materials  to  a  consumer  of  the 

» 


same,  taking  paper  therefor,  each  being  in  good 
credit,  with  the  responsibilities  entirely  inde- 
pendent. Here  actual  value  has  passed,  and  the 
endorsement  by  the  payee,  and  its  use  with  his 
banker,  make  of  it  at  once  productive  capital, 
which  facilitates  and  vitalizes  commerce.  Some- 
times goods  may  legitimately  be  purchased  by 
each  customer  of  the  other.  Where  this  is  done, 
it  is  well  to  know  that  in  the  interchange  paper 
is  given  for  only  differences  in  settlement,  instead 
of,  as  is  often  the  case,  having  the  paper  repre- 
sent the  whole  purchase  each  way. 

WAREHOUSE    RECEIPTS. 

A  class  of  borrowers  will  present  themselves 
for  loans,  offering  as  collateral  security  their  own 
warehouse  receipts,  for  property  they  propose  to 
hold  in  trust  for  the  account  of  the  lender.  I 
have  made  it  a  rule  during  my  banking  experi- 
ence never  to  loan  on  warehouse  receipts  issued 
by  the  borrower,  unless  I  was  willing  to  loan 
him  the  amount  asked  for  independent  of  such 
receipts.  The  enforcement  of  the  rule  in  one 
notable  case  saved  the  bank  of  which  I  was 
president  over  $100,000.00;  other  banks  loaning 


the  same  customer  on  his  own  warehouse  receipts 
lost  more  than  the  sum  named.  I  believe  the 
principle  of  loaning  on  warehouse  receipts  (so- 
called)  issued  by  the  borrower  on  property  under 
his  control  to  be  radically  wrong^.  It  encourajjes 
a  system  which  develops  inflation,  contributes  to 
the  power  and  opportimity  of  dishonest  motives, 
and  saps  the  foundation  of  the  true  principle 
of  lending  on  collaterals. 

CHRONIC     BORROWERS. 

Again,  all  banks  recognize  a  class  known  ai> 
**  chronic  borrowers/'  or  so-called  **  luggers,''  who 
are  to  be  avoided  by  money  lenders  as  vigorously 
as  a  city  would  avoid  a  pestilence;  tliey  may  be 
estimated  to  be  wealthy  men  or  corporations,  but 
as  a  matter  of  fact  their  methods  and  true  con- 
dition make  them  unworthy  of  bank  credit  at 
all.  They  may  not  be  actually  insolvent,  but 
they  are  treading  on  dangerous  ground  and 
should  be  shunned  by  the  prudent  banker  as  he 
would  shun  an  impostor. 

WRITTEN    STATEMENTS    IMPORTANT. 

The  system  adopted  by  many  banks  requiring 
a  customer,  desiring  to  borrow  money,  to  make 

S7 


over  his  own  signature  a  written  statement 
showing  his  financial  condition,  is  a  wise  one. 
A  banker  who  views  such  statement  in  the 
light  of  what  the  borrower  would  realize  if 
retiring  from  business,  under  adverse  circum- 
stances, will  not  over-estimate  the  present  or 
future  value  of  the  assets  shown. 

The  creation,  by  the  several  States,  of  a 
uniform  law  and  severe  penalty  for  making  a 
false  statement  to  obtain  credit,  and  the  vigorous 
enforcement  of  the  penalty,  would  show  salutary 
results.  Concerted  action  on  the  part  of  creditors 
in  securing  the  punishment  of  fraudulent  debtors, 
would  give  great  force  and  effectiveness  to  such 
a  law.  The  man  who  willfully  lies  to  get  credit 
is  as  much  a  thief  and  more  dangerous  than 
the  man  who  steals  a  pocket-book.  The  former 
may  be  aided  by  respectability  and  a  good  past 
record  ;  the  latter,  people  are  on  the  lookout  for, 
and  opportunities  are  limited.  Prosecute  and 
punish  the  maker  of  false  statements  as  a 
criminal,  and  the  credit  atmosphere  will  be 
purified,  and  the  liability  to  unworthily  bestow 
confidence  greatly  lessened. 

The  ability  to  analyze  a  trial  balance  or  state- 
ment may  be,  in  part,  a  gift,  but  experience  is  the 


only  safe  guide.  The  cultured  eye  intuitively 
takes  in  the  quick  assets,  unconsciously  the  mind 
deducts  the  liabilities  and  strikes  a  balance 
without  any  actual  computation  being  made. 
While  this  statement  is  true,  it  does  not  lessen 
the  importance  of  prudent  investigation  and  a 
critical  examination  before  a  decision  is  reached. 
It  is  also  true  that  solvent  borrowers  delight 
in  searching  scnitiny.  The  refusal  to  disclose 
actual  financial  condition  to  a  creditor,  who  has  a 
right  to  know,  is  acknowledged  weakness,  or  piti- 
able stupidity.  Together  the  banker  and  borrower 
can  digest  a  statement  made  and  determine  its 
strength  or  weakness,  which  can  only  be  a  satis- 
faction and  source  of  great  help  to  the  proposed 
borrower  entitled  to  credit. 

INFORMATION   WANTED. 

A  banker  will  want  to  know  how  inventories 
are  taken ;  whether  the  product  is  put  in  at 
original  cost,  or  its  market  value.  He  will  also 
want  to  know  the  liquidating  character  of  the 
assets ;  whether  all  worthless  and  doubtful  debts 
have  been  charged  off ;  what  the  responsibility 
of  the  customer  is  outside  of  his  business  invest- 


ment ;  also  whether  the  customer  ever  signs 
security  bonds  to  accommodate  friends  holding 
positions  of  trust,  where  possibilities  are  always 
dangerous.  With  the  existence  of  good  Surety 
Companies,  prepared  to  furnish  bonds  as  a  business 
transaction,  no  reasonable  excuse  exists  for 
appealing  to  friends  to  help  in  this  direction. 
It  embarrasses  a  friend  having  intimate  social 
relations  to  refuse,  yet  a  prudent  man,  especially 
a  borrower  of  money,  feels  that  he  must  do  so, 
for  there  are  contingencies  beyond  a  friend's 
honesty  to  be  considered. 

ACCOMMODATION     PAPER. 

The  banker  will  want  to  know  further  whether 
the  customer  ever  makes  accommodation  paper 
or  accommodation  endorsements.  It  is  wise  to 
avoid  accommodation  paper  or  accommodation 
endorsements,  for  they  are  undesirable  from  the 
fact  that  the  maker  or  endorser  gets  no  value, 
and  if  obliged  to  pay,  he  will  become  bitter  in 
his  denunciation  of  the  lender — while,  when  the 
debt  was  contracted,  he  voluntarily  perpetrated 
the  folly  now  so  fruitful  of  regret,  never  expect- 
ing to  be  called  upon  to  pay. 


Acconniiuilaiiuu  paper  is  the  **  plague  spot  of 
commerce/^  and  the  stimulator  of  panics,  becaiLse 
capable  of  nnlimited  extension.  It  finally  lands 
both  borrower  and  lender  in  the  whirlpool  of 
disaster.  I  do  not  mean  single  name  paper, 
where  the  maker  gets  value,  but  where  he  loans 
his  credit  without  value.  Fortunately,  accom- 
modation paper  has  ear  marks  that  the  skilled 
eye  usually  detects,  which  to  a  certain  extent 
become  a  safeguard  to  the  lender. 

CHANGE   IN  CIRCUMSTANCES. 

The  liability  to  change,  in  circumstances  and 
conditions  of  customers,  requires  etenial  vigilance 
on  the  part  of  the  banker;  hence  he  must  always 
be  on  the  alert.  A  man  whose  record  has  been 
good  as  to  integrity  and  success  may,  if  disposed, 
through  the  various  avenues  at  his  command, 
work  disaster  and  ruin.  It  is  often  true  that  a 
man,  blinded  by  the  perils  developed  in  adver- 
sity, does  not  hesitate  to  use  methods  that  create 
for  him  undying  regret,  and  that  frightfully 
wound  confidence  in  humanity,  thus  crippling 
the  ability  of  others  to  borrow  for  legitimate 
needs.     Hy  adroit  manipulation  he  conceals  his 


true  situation,  and  under  pressure  he  determines 
to  get  money  even  at  the  expense  of  his  honor. 
He  is  liable  to  succeed  in  doing  so  for  a  time  ; 
he  will  unblushingly  make  false  statements  as 
to  his  responsibility,  as  to  the  volume  of  his 
business  and  the  character  of  paper  made  br- 
others which  he  offers  for  discount.  He  will 
solemnly  declare  that  he  is  using  only  business 
paper,  where  value  has  passed  to  the  maker, 
while  as  a  matter  of  fact  it  is  purely  accommo- 
dation or  fictitious  paper,  representing  no  value 
whatever.  He  who  maliciously  deceives  will 
inevitably  learn  that  it  is  an  awful  fate  to  become 
the  slave  of  an  evil  memory. 

Character  is  never  known  until  it  has  been 
tested  by  some  ordeal  that  shakes  the  very 
foundation  of  life.  Beecher  says,  ^^\dversity  is 
the  mint  in  which  God  stamps  upon  us  his 
image  and  superscription. '^  Deep  down  in  the 
hearts  of  true  men  lie  the  germs  of  heroism  ; 
emergencies  develop  them.  In  other  hearts  evil 
lurks  and  temptation  shows  its  power.  We  are 
surprised  to  find  that  the  man  we  believed  to  be  the 
soul  of  honor  and  integrity  has  proven  himself  to 
be  an  arrant  coward  and  swindler.  Such  cases 
will  come  into  the  experience  of  almost  every 

42 


banker,  and  the  most   war>'    will    be   deceived 
and  entrapped. 

A  banker  will  find  men  of  liigh  social  posi- 
tion [and  great  wealth  of  good  intentions], 
but  witliout  practical  exiDcrience  in  business 
or  bankable  assets,  who  will  have  accounts 
with  his  bank,  and  they  will  be  sure  to  want 
to  borrow  money.  They  may  have  rich  wives, 
who  do  not  endorse  their  husband's  notes,  yet 
give  them  luxuriant  surroundings  and  influ- 
ential connections  that  indicate  wealth.  They 
are  very  liable  lo  have  elegant  bearing,  and  fine 
persuasive  powers,  which  make  the  refusal  of 
credit  a  painful  operation  to  a  bank  officer,  but 
it  must  be  done,  or  he  will  tie  up  money  in  a 
permanent  investment  which  may  cost  him  his 
position. 

FORETHOUGHT   NEEDED. 

Wise  forethought  is  a  virtue  whose  value 
cannot  be  over-estimated.  A  banker  must  for- 
ever bear  in  mind  that  monetary  conditions 
rapidly  change,  that  confidence  will  be  suddenly 
depleted,  that  deposits  will  melt  away  like  dew 
before  the  morning  sun,  and  various  other  con- 
tingencies arise,  so  that  absolute  contracts  a*s  to 

43 


future  transactions  in  banking  are  not  consistent 
with  prudence. 

In  the  panic  of  1884,  I  heard  a  prominent 
banker,  where  a  line  of  credit  had  been  pre- 
viously agreed  upon,  and  the  customer  protested 
at  being  denied  that  line,  say^ — ^^  All  trades  are 
off  in  a  panic.''  I  know  the  customer  then 
thought  the  restriction  unwarranted  and  unjust, 
but  not  long  ago  I  heard  him  say,  "The  banker 
was  justified  in  his  position  and  acted  wisely.'' 

It  is  true  that  when  deposits,  under  the  influ- 
ence of  fear  or  depressed  monetary  conditions, 
are  being  depleted  and  resources  limited,  the 
prudent  banker  must  make  every  borrowing  cus- 
tomer bear  at  least  his  proportion  of  the  shrink- 
age. By  so  doing  he  aids  the  customer  in  get- 
ting himself  in  condition  to  be  safe  in  the  pend- 
ing emergenc}^,  and  at  the  same  time,  is  protect- 
ing the  bank  against  disaster  to  itself,  thereby 
promoting  the  interests  of  every  depositor  and 
public  confidence  as  well. 

We  this  year  have  some  striking  illustrations 
of  the  practicability  of  this  principle  before  us. 
(I  trust  now  behind  us.)  Not  since  the  demo- 
niac yell,  born  in  the  hot-bed  of  lunacy,  known 
as   the    Chicago    Convention    of    1896,    has  any 


metropolitan  banker  I'unnd  a  bed  of  rases  on 
whicli  to  sleep  and  dream  of  the  Klysian  bower, 
where  silver  cranks  are  unknown.  Anxitiirs 
have  made  days  crucibles  of  sorrow,  and  nights 
hideous  with  the  possibilities  of  the  morrow. 
Solvent  industries  have  been  imperilled.  Some 
men  have  proven  themselves  craven-hearted 
cowards  by  sacrificing  their  credit  and  assets, 
when,  had  they  given  their  bankers  their  confi- 
dence, they  might  have  lived  and  protected 
themselves  and  the  connnunity  from  a  shock  not 
easy  to  recover  from.  When  it  is  too  late,  they 
realize  their  imbecility  and  cowardice.  The 
sacrifice  has  been  made,  however,  and  they  can 
never  recover  the  position  they  heretofore  held 
in  the  esteem  and  confidence  of  the  public. 

During  such  crucial  periods  every  conscien- 
tious banker  will  keenly  feel  the  responsibility  of 
passing  upon  a  man's  credit,  which  may  deter- 
mine his  destiny.  It  is  a  grief  to  be  compelled 
to  refuse  credit  to  one  whose  past  achievements 
have  given  him  high  standing.  He  may  be  a 
warm  personal  friend.  The  banker  may  have 
been  startled  by  the  discover)'  that  this  friend  is 
slowly  going  down  the  current,  and  knows  that 
he  is  sure  to  finally  rush  over  the  rapids  to  dis- 
aster and  ruin. 

45 


A  man  thus  struggling  never  realizes  his  true 
condition  and  the  inevitable  result.  If  cour- 
ageous and  honorable  he  will,  with  tenacity  and 
valor,  fiercely  battle  to  sustain  his  reputation, 
shield  his  pride  and  protect  his  assets  against  the 
depreciation  caused  by  forced  or  acknowledged 
insolvency.  He  believes  himself  to  be  entitled 
to  the  credit  he  asks  for,  feeling  sure,  if  the 
credit  were  granted  his  difficulties  would  be  over- 
come. He  recognizes,  however,  that  the  refusal 
of  his  banker  to  grant  further  credit  means  de- 
feat, for  he  has  nowhere  else  to  go.  Heretofore 
this  man  ma}'  have  been  eagerly  sought  after  b\- 
money  lenders,  and  perhaps  given  such  liberal 
credit  as  to  produce  the  very  danger  which  now 
threatens  him.  Money  was  so  easy  to  obtain  he 
extended  his  business,  and  thereby  sharpened 
the  weapons  which  are  now  cutting  his  throat. 

There  is  a  sympathetic  touch  among  bankers 
and  money  lenders  which  conveys  the  news  of 
over-borrowing;  an  almost  imperceptible  voice 
that  whispers  the  tidings,  and  the  borrower  who 
was  heretofore  freely  solicited,  now  meets  refusal 
on  every  hand — not  harsh,  but  kind — the  lender 
desiring  to  wound  the  pride  of  the  borrower, 
whom  he  respects,  as  little  as  possible. 


Tlii>  iiKiu,  now  thivalcned  with  ruin,  hy  the 
relentless  conditions  prevailing,  may  have  l)cen 
a  striking  character  in  the  community;  benevo- 
lent in  his  charity,  beloved  for  his  manly  quali- 
ties, patriotic  in  his  citizenship,  generous  in  his 
friendships,  and  supremely  loyal  to  his  cofivic- 
tions.  His  resources,  to  outsiders,  may  have 
seemed  practically  inexhaustible,  and  his  trium- 
phant march  irresistible.  He  is  a  proud  spirited 
man,  conscious  of  his  own  integrity.  It  is  pos- 
sible that  conditions  over  which  he  had  little  or 
no  control  may  have  been  created  that  sapped 
the  foundation  of  his  prosperity,  and  sent  him 
toward  financial  ruin  with  resistless  rapidity. 
Every  moment  he  is  treading  over  a  yawning 
gulf  in  which  may  soon  be  buried  his  fond  hopes, 
and  his  fatally  wounded  pride  be  left  to  writhe 
in  agony. 

Of  necessity  business  is  cold  in  its  realities; 
cannot  be  otherwise;  a  banker  must  divest  all 
his  transactions  of  favoritism,  personal  friend- 
ship and  all  prejudices  created  by  them,  or  his 
tnist  is  in  danger.  When  a  banker's  sympatliies 
control  him  in  estimating  and  deciding  a  credit, 
his  judgment  is  weakened,  if  not  destroyed. 

The  aforesaid  applicant  for  credit,  who  must 


now  be  denied,  may  have  shared  with  this  bank 
officer  social  festivities  and  home  joys;  their 
families  may  have  been  intimate,  and  tender 
associations  formed.  The  appeal  for  aid  in  his 
distress  comes  with  seductive  power,  but  fidelity 
to  his  trust  compels  the  banker  to  refuse  the 
credit  asked  for.  It  may  be  his  first  refusal  to 
this  proud  spirited  man  and  his  beloved  friend, 
hence  fear  that  his  judgment  may  be  at  fault 
haunts  him.  Experience  has  taught  the  banker 
that  the  existing  conditions  can  only  terminate 
in  financial  death, — he  must  refuse.  When  the 
unfortunate  debtor  becomes  conscious  of  his  fate, 
his  soul  is  the  victim  of  despair ;  he  charges 
his  banker  friend  with  cold-hearted  cruelty, — 
when  it  is  simply  loyalty  to  a  sacred  trust  and 
obedience  to  duty.  Gladly  would  this  friend 
help  him  if  he  could  do  so  with  safety  to  the  in- 
terests he  represents,  but  he  knows  help  would 
only  prolong  the  struggle  and  result  in  an  out- 
rage upon  his  bank. 

I  am  not  now  referring  to  the  banker  whose 
so-called  conservatism  is  only  commercial  im- 
becility and  cowardice,  who  in  unwarranted  alarm 
runs  when  the  first  shot  is  fired,  and  injudiciously 
refuses  credit,  which,  wisely  extended,  would  save 

48 


the  debtor  and  spare  the  shock  to  the  business 
world.  Such  a  banker  is  an  enemy  to  business 
interests,  and  unworthy  of  the  position  he  holds. 
Commercial  disturbances  will  occur,  peril  will 
abound  ;  under  the  influence  of  a  panic,  chaos 
rules,  a  financial  volcano  will  appear  and  bury 
hopes  in  the  grave  of  despair.  Prudence  does  not 
imply  timidity;  courage  does  not  imply  rashness; 
refusal  does  not  imply  wisdom.  A  banker  mitst 
be  wnse  enough  to  supply,  so  far  as  his  ability  will 
l^ennit,  the  legitimate  needs  of  worthy  customers; 
sagacious  enough  to  discriminate  against  a  hope- 
less case  in  favor  of  one  whom  timely  aid  will  save 
from  failure ;  courageous  enough  to  refuse  all 
appeals  for  help,  when  help  would  only  prejudice 
his  bank,  and  be  unavailing  in  saving  the 
customer. 

The  bank  officer  is  only  a  trustee,  liis  trust  is 
sacred;  loyalty  to  his  trust  should  make  him  for- 
get his  prejudices  and  his  friendships  when 
weighing  the  rights  and  interests  of  his  bank. 
To  know  just  how  far  to  go  with  safety  is  the 
wisdom  ever)'  honest  banker  seeks. 

BANKER'S  ATTITUDE  IMPORTANT. 

In  hours  of  financial  peril  the  attitude  of  a 
banker  may  inspire  confidence    or  create  fear. 

49 


Nervousness  is  catching,  especially  where  the 
public  is  already  excited.  Intrepid  nerve  and 
mental  poise  are  essential  qualities  in  all  depart- 
ments of  life,  but  especially  so  in  a  banker,  who, 
in  monetary  affairs,  should  be  a  leader ;  on  his 
part  a  calm,  self-contained,  dignified  manner 
will  ever  be  reassuring.  A  wise  banker  in  the 
community  becomes  a  mainspring,  a  balance 
wheel,  representing  courage,  good  sense,  steady 
energy,  and  moral  independence,  whose  influence 
works  like  magic  in  restoring  and  sustaining 
confidence. 

SPECULATION    SHOULD    BE    DISCOURAGED. 

It  is  the  unqualified  duty  of  bankers  to  refuse 
money  to  speculators,  especially  in  money  strin- 
gencies, no  matter  what  security  they  offer. 
Their  purpose  is  to  profit  from  the  dire  necessities 
of  the  panic-stricken,  and  build  their  own  fortunes 
on  the  ruins  of  the  fortunes  of  others,  towards 
whose  destruction  they  have  contributed.  The 
bank  or  banker  who  encourages  unwarranted 
speculation,  by  lending  money  to  market  man- 
ipulators, commits  a  crime  which  should  drive 
him  from  the  recognition  of  the  legitimate 
members  of  his  profession.     For  instance,  aiding 

50 


the  officers  of  a  corpoialion  in  usiu^  iu  .suiplu.^ 
funds  to  buy  the  corporation's  own  stock  on 
margins,  for  speculative  purposes,  if  at  all.  The 
unprincipled  speculator  cares  nothiuj^  for  public 
weal ;  men  and  principles  are  unhesitatingly 
sacrificed.  I  refer  now  to  manipulators  of 
markets  who  instigate  and  circulate  false  reports, 
who  impeach  confidence,  precipitate  panics,  who 
on  the  slightest  provocation  predict  gold  famines, 
offer  premiums  on  gold  options,  exaggerate  the 
depleted  condition  of  the  Government  Treasury 
and  its  effect  upon  business,  all  to  stampede  the 
timid;  speculators  *  who  borrow  money  in  large 
or  small  blocks,  withdraw  it  from  circulation, 
where  it  is  needed  for  legitimate  business,  and 
lock  it  up  in  vaults  and  create  stringencies, 
thereby  demoralizing  trade  and  ruining  fortunes, 
while  on  the  ruins  these  selfish  fiends  build  up 
competencies  and  laugh  at  the  miseries  of  their 
victims.  These  cowardly  vultures,  to  serve  their 
own  purposes,  will  maliciously  attack  the  good 
credit  and  good  faith  of  any  individual  or  bank. 
They  possess  all  the  instincts  of  the  highwayman 
or  midnight  assassin,  without  the  physical 
courage  to  perfonn  the  latter's  work. 

This  is  in  no  way  intended  to  reflect  upon  the 


honorable  Board  of  Trade  operator  or  Stock 
Exchange  broker  who,  relying  upon  facts,  make 
a  convenient  market  for  the  products  of  the 
country  and  the  solvent  securities  of  the  world. 

No  banker  who  speculates  is  ever  a  safe  cus- 
todian of  trust  funds ;  his  judgment  is  divested 
of  its  efficiency,  his  attention  diverted  from  and 
his  anxiety  unfits  him  for  business.  Under  the 
crucifying  pressure  no  man  can  be  effective. 
Many  a  banker  has  commenced  speculating  with 
his  own  money  in  a  small  way,  never  dreaming 
in  the  beginning  that  he  would  make  use  of  his 
bank's  funds.  When  private  resources  became 
exhausted,  resort  was  made  to  the  bank's  money 
and  the  death  trap  was  set ;  the  temptation 
became  irresistible,  the  banker  made  a  bank- 
ruptcy of  his  own  existence  and  an  inheritance 
of  withering  sorrow. 

A  bank  and  its  credit  must  never  be  used  for 
personal  ends.  I  believe  that  an  executive 
officer,  in  active  management,  should  never  bor- 
row money  of  his  bank,  but  should  keep  himself 
in  a  clean  and  independent  position,  where  his 
judgment  is  uninfluenced  by  any  interest  other 
than  the  bank's  highest  good.  History  clearly 
proves  that,  as  a  rule,  bank  failures  find  their 

52 


orijj^n   in  the  attempt  of    officers  to   use  their 
bank  for  private  purposes. 

Look  out  for  the  bank  organized  so  that  its 
promoters  may  increase  their  borrowinj^  facilities ; 
it  is  always  a  menace  to  safety  and  public 
interests,  and  becomes  a  putrid  ulcer  on  bnsiiuss 
life. 

CONCLUSION. 

In  conclusion  allow  me  to  say  that  an  honest, 
able  banker  can  become  a  powerful  factor  in  the 
equitable  adjustment  of  the  relations  between 
capital  and  labor.  The  success  of  his  bank 
depends  upon  the  prosperity  of  the  industrial 
interests  of  the  country,  and  as  there  can  be  no 
solidity  and  perpetuity  of  prosperity  except  upon 
a  just  recogiiition  of  the  rights  of  both  capital 
and  labor,  independent  of  the  moral  sentiment 
that  compels  fair-minded  men  to  fight  injustice 
and  oppression,  it  becomes  the  banker's  impera- 
tive duty  to  stand  as  an  impartial  arbitrator 
between  the  two,  striving  to  be  just  to  each. 

The  capitalist  employing  labor,  who  does  not 
concede  to  wage  earners  their  rights,  and  fairly 
treat  them,  is  a  pirate  on  the  sea  of  commerce, 
whose  craft  is  sure  to  be  wrecked  in  the  fury  of 

58 


the  storm  Eternal  Justice  is  brewing  for  the 
punishment  of  him  and  his  kind. 

Gigantic  fortunes,  made  up  of  unholy  gains, 
that  re])resent  losses  forced  by  the  stronger  upon 
the  weaker,  the  tears  and  anguish  of  poverty, 
are  an  insult  to  God,  and  a  curse  to  the  possessor. 

A  man  whose  idolatry  for  gold  has  made  the 
eyes  of  his  conscience  blind,  and  frozen  every 
generous  impulse  of  his  nature,  so  that  his  moral 
sense  lies  only  in  the  might  that  money  gives, 
need  not  flatter  himself  that,  because  judgment 
for  unjust  and  cruel  deeds  is  delayed,  there  is  np 
punishment.  The  attempt  of  such  a  man  to  win 
the  approbation  of  just  men,  and  to  make  peace 
with  the  Infinite,  by  making  liberal  contribu- 
tions to  churches,  or  endowing  schools  or  chari- 
ties, is  as  useless  as  for  the  leopard  to  try  to 
change  his  spots,  or  for  the  slimy  serpent  to 
attempt  to  invest  himself  with  the  wings  of  the 
eagle.  The  unthinking  public  may  applaud  the 
parade  of  his  virtues  and  generosities  (so-called?) 
and  sycophants  dance  attendance  upon  the  ele- 
gance of  his  entertainments,  but  the  inexorable 
settlement  day  will  come  when  the  penalty  must 
be  paid.  Justice  is  a  law  inherent  in  creation. 
Its  edicts  may  be  slow  in  execution,  but  they  are 
as  sure  and  resistless  as  death. 

54 


The  foregoing  in  no  way  applies  to  noble, 
public-spirited  citizens,  who,  through  magnificent 
ability,  exhaustless  energy  and  wise  economy, 
have  accumulated  fortunes  that  make  generosity 
possible,  and  whose  benefactions  bless  the  world 
and  crown  their  own  lives  with  immortal 
memories. 

And  further,  that  the  same  law  which  governs 
morals  governs  business ;  whether  we  stand  or 
fall  depends  upon  ourselves.  If  we  stand,  it 
must  be  in  the  rectitude  of  our  own  lives  and 
the  prudence  of  our  own  management.  We  may 
use  all  the  faculties  we  possess  and  all  the 
experience  we  have  gained,  yet  we  shall  make 
mistakes.  A  mistake  does  not  imply  a  disaster, 
if  the  qualities  of  manhood  are  so  stalwart  as  to 
demand  another  trial,  and  we  are  courageous 
enough  to  acknowledge  past  errors,  and  wise 
enough  to  profit  by  experience. 

The  grandest  triumphs  always  crown  the 
severest  struggles.  The  consciousness  of  being 
right  gives  courage,  strength  and  irresistible 
power.  Right  always  ultimately  triumphs,  and 
there  is  no  kingdom  so  rich,  no  crown  so  bright, 
no  inheritance  so  grand  as  spotless  integrity. 
The  banker  who  has  proven  worthy  of  his  trust 

55 


has  won  that  self-respect  born  of  purity  of  life 
and  honesty  of  purpose.  The  merited  respect  of 
our  fellows  becomes  a  matchless  diadem  when 
the  shadows  of  old  age  fall  upon  us.  An  honor- 
able old  age  is  clothed  with  the  memory  of  the 
highest  success  a  man  ever  achieved — hence  the 
twilight  hours  of  a  truly  successful  life  become 
an  abiding  consciousness  of  manhood^s  meridian 
grandeur.  Nowhere  are  opportunities  for  being 
just,  fair  and  helpful  more  abundant  than  in  a 
banker's  career.  The  memory  of  a  good  act 
never  dies ;  it  is  a  benediction  upon  the  past,  a 
joy  in  the  present  and  an  inspiration  for  the 
future,  and  will  cast  a  sweet  halo  over  the  grave 
of  the  departed. 


PRESS  OF 

S.  D.  CHILDS  &  CO. 

CHICAGO. 


UNIVEESITY  OF^CALIFOKNIA 
BERKELEY 


LIBRARY, 


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